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Economy

Decathlon steps up presence in China while local brands downsize

French firm Decathlon Group, one of Europe's biggest sporting goods chains, plans to increase its market share and accelerate its expansion in mainland China, Shanghai's First Financial Daily reports.

The company's planned expansion will add to the current woes of domestic sports brands as they continue to suffer at the hands of overseas rivals. Li Ning, a leading sporting goods brand in China, has seen its first financial loss in eight years due to oversupply. Fellow domestic rivals Anta and Peak have also run into financial trouble, with Anta closing 590 stores last year and planning to cut an additional 475 this year. Meanwile, Peak's net profit fell 60% last year and the chain is reported to being shutting down an average three stores per day.

Decathlon has an estimated 500 megastores around the world, with a total of 57 in China after opening 16 new stores last year. The French firm is expected to open a further 100 shops in the next three years, with a total 150 stores across the country by 2015.

The company is unique in its business model as it controls almost the whole chain of production from design, material procurement, logistics, brand marketing and retail. It also controls partial production of its products, owning bicycle plants in France and China's Suzhou, as well as two warehouses in Beijing and Kunshan, reports the First Financial Daily.

Decathlon has yet to unveil its sales and annual profit from its enterprises in China. One unnamed industry analyst, however, estimates that Decathlon's average profit margin may be above 40%, far higher than most domestic sport brands.